Financial Times

Poultry industry faces a crisis

The Sri Lankan poultry industry has been forced into a crisis situation due to the government’s delay in increasing the maximum selling price of chicken.

This will result in a shortage of chicken in the Colombo and suburban markets at least for six weeks due to the sudden stoppage of production, poultry producers warn. The Consumer Affairs Authority (CAA) had fixed the maximum selling price at Rs. 280 per kilo in February 2008 although the producers spent Rs. 315 per kilo. This price fixing greatly affected the industry forcing 27% of the small scale chicken farmers to stop the growing of two day old chicks taken from hatcheries up to 38 to 42 days to get the meat for sale.

All large scale producers have also cut down their production by 50%. Managing Director of Bairaha Farms Limited Yakooth Naleem, also a board member of the All Ceylon Poultry Farmers Association, told The Sunday Times FT that the shortage of chicken experienced in retail outlets in Colombo and suburbs was due to the government’s failure to increase the maximum selling price and the producers couldn’t handle the high prices of chicken feed which had directly caused the increase in the current production price.

The CAA recently fixed the maximum retail price at Rs. 320 per kilo recently in spite of the request made by poultry producers to increase the price to Rs.350. Mr. Naleem noted that the current price increase is sufficient at the moment to maintain the industry.

He said that poultry farmers are reluctant to buy two day old chicks from hatcheries and to grow them up to six weeks as they are not receiving a reasonable price from buyers. He added that the price of chicken feed had increased by 49.9% compared to prices in 2007. Electricity and labour costs have also been increased. If the poultry feed price alone is taken into consideration the retail price today should be Rs. 328, he said.

The industry has been on the decline since 2005. Around one million people depend on the industry and the government is collecting around Rs. 3 billion as taxes annually from large and small scale producers, he said, expressing the hope however that the chicken market will be normalized within the next six weeks.

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